Mobile in a Global World: The Great Equalizer
[This post is part of our Mobile in 2016 series, featuring 2016’s top trends in mobile and our prediction for the new year.]
We live in a mobile world.
Look no further than your pocket to see just how much mobile has penetrated the globe. If you own one of the 700 million iPhones sold by Apple, you have a device designed in Silicon Valley, manufactured in Taiwan, with processors from Samsung in South Korea, Bluetooth components from Murata in Japan, network components from Infineon in Germany, and power management components from Dialog Semiconductors in Italy.
All in all, that one little device is the product of collaboration between no fewer than 31 countries across five continents.
Apple’s supply chain is just one example of the proliferation of mobile.
Today, there are more than 8.6 billion active mobile devices worldwide—that’s 1.2 billion more devices than there are people. In four years time, 70% of the global population will be using smartphones, according to Ericsson’s Mobility Report.
From Silicon Valley to the Third World, examples of the global spread of mobile technology are copious:
- 52 countries have more active mobile devices than people
- There are eight times as many mobile devices as there are land-lines
- 260 billion apps will be downloaded in 2017, according to Gartner
- The top four Chinese banks have over 350 million customers using their mobile apps for banking (that’s 30M more than the population of the United States)
- Consumers in South Korea alone spent nearly $15 billion USD in retail via mobile devices in 2015
- By 2018, the Chinese mobile gaming market will be worth $7.4 billion USD and involve 770 million gamers
But of course, the mobile revolution has a much further reach than just putting Clash of Clans into the hands of millions across the globe. The story of mobile is the story is a story of international economic development, of global trade, of transformation.
The true impact of the mobile revolution is a more equitable playing field. Between the app stores and the mobile web, mobile technology is bringing the world together. It is creating a market that grows more global with each passing day. One in which the first world and the least developed economies alike can compete on level terms. It has paved the way for developing countries to become technological powerhouses, and it has brought economic stability in the form of over 11 million new jobs worldwide.
Yet, as much as I love raw data, the impact of mobile in a global world cannot be inferred by numbers alone. Its true effects are a series of anecdotes ranging from remote villages to tech’s unicorns. A true understanding of globalization requires a less global view—a view from the perspective of the individuals it impacts the most.
We’ve examined three regions, historically impoverished and lagging greatly in infrastructure and technological advancement, to humanize the mobile revolution. From Kenya to India to Argentina, each of these stories shows a different side of the role mobile is playing in millions of lives across the globe. And each shows a story of empowerment and the slow, but steady movement in the direction of a more level playing field where all competitors have an equal opportunity.
Disrupting Entire Economies in Sub-Saharan Africa
Our first story centers on a country few associate with mobile technology: Kenya.
Photo credit: Sven Torfinn, Oxfam
In recent years, the sub-Saharan nation of Kenya has established a reputation as the world’s leader in mobile finance. The unlikely title is largely accredited to the launch of M-Pesa (pesa meaning ‘money’ in Swahili), Kenya’s branchless banking system. Designed for Safaricom and Vodacom, the predominant mobile network operators in Kenya and Tanzania, M-Pesa is a mobile phone-based money transfer and microfinancing service with operations in 11 countries spanning Africa and eastern Europe.
In 2010, The Economist called M-Pesa a “godsend” for rural areas:
IT IS like magic. By clicking a few keys on a mobile phone, money can be zapped from one part of Kenya to another in seconds. For urban migrants sending money home to their villages, and for people used to queuing at banks for hours to pay bills or school fees, the M-PESA money-transfer service, operated by Safaricom, Kenya’s largest mobile operator, is a godsend. No wonder it is used by 9.5m people, or 23% of the population, and transfers the equivalent of 11% of Kenya’s GDP each year; or that it has inspired more than 60 similar schemes across the world.
Today, almost 20 million people worldwide actively use M-Pesa, which has grown to power over 3.4 billion person-to-person transactions. In Kenya, the country of origin, only 29% of adults have a bank account, while 68% actively use mobile money services.
In addition to the infusion of cash it brings, mobile money has paved the way for traditionally impoverished countries like Kenya to compete for, and participate in, first-world trade. As is a common theme in the developing world, Africa suffers from a lack of infrastructure. The vast majority of the sub-Saharan population is without electricity and has never experienced the desktop web.
Enter mobile. Hundreds of millions of Africans are experiencing the internet for the first time on a mobile device, according to a CNN report. The development of low-cost, energy-efficient mobile phones has brought the first world to much of rural Africa. Banal to our standards, their leading apps, a flashlight and the FM radio, are a lifeline to those who lack access to electricity, infrastructure mass communication, and fixed telephony.
Today, more Africans own a mobile device than have access to electricity. We talk a lot about the advantages of going ‘mobile-first,’ but the African continent has taken it one step further—by going mobile-only.
At the same time, the rapid development brought on by mobile proliferation hasn’t come without its consequences. The sheer amount of cash M-Pesa has introduced to Kenya, for example, is directly attributed with the nation’s steep inflation rates. As more and more Kenyans participate in the financial markets and gain disposable income for the first time, the demand for goods and services has outpaced the supply, driving up prices—making many goods prohibitively expensive. In 2011, inflation peaked at 19.7%, before the government was forced to step in with monetary policy.
Leapfrogging Economic Disparities in Southeast Asia
Our next story, set in the emerging superpower of India, echoes the story of Kenya.
Telegraph. Land-lines. Radio. Television. Computer networks. Ethernet. Mobile. 2g. 3g. 4g.
The first-world follows a predictable, step-based journey of telecom development. As each new disruptive technology emerges, it’s quickly adopted to remain competitive in a dog-eat-dog world—that is, until the next big thing comes around.
For the developing world, innovation isn’t as continuous. With each new technology comes an often prohibitive need for capital—a lofty investment in rural infrastructure, data centers, and broadcasting towers. Nations unable to finance this development find themselves in a constant struggle to remain competitive in the global market, and the digital divide widens with each first-world advantage.
Nowhere is this divide more evident than in rural India. While urban metropolises like Mumbai and Bangalore flourish, much of the rural population (a staggering 70% of the total population) still lack access to electricity, telephony, and basic infrastructure. In 2015, only 1% of rural India owned a land-line phone and 300 million Indians lack access to electricity. As the rest of the world undergoes technological change, the least developed countries find themselves further and further behind with a 40% adoption rate for new technologies (reaching as low as 4% for internet adoption).
According to researchers at the Harvard Business School,
“Changes in the pattern of technology diffusion account for 80 percent of the Great Income Divergence between rich and poor countries since 1820.”
In 2009, 60 million Indians had internet access, less than 5% of whom resided in rural India. By 2018, BCG predicts that the internet will be in the hands of over half a billion people in the Indian subcontinent, almost half of whom live in rural areas.
What changed? India became mobile-only.
For the first time, the third world had affordable access to the latest and greatest of telecommunications technology. With the rise of affordable mobile phone subscriptions (made possible by the liberalization of the telecom sector) and 2G/3G connectivity, mobile and the mobile web spread to all walks of life. Remote villages that never had the luxuries of radio, television, land-phones, or household electricity were suddenly connected to the rest of the world. Rural India was essentially able to ‘leapfrog’ many of the steps traditionally seen in the development of the telecommunications sector (and with them, their capital requirements). Almost overnight, this impoverished region home to one-tenth of the world’s population became a forced to be reckoned with in the global market, thanks to mobile telephony.
By not requiring the extensive infrastructure development associated with other telecom technologies, mobile telephony was free to spread rapidly throughout rural and urban regions alike. With it, came a vast array of apps and opportunities that facilitated India’s rise as an emerging superpower—apps like m-Agriculture apps that connect farmers to wholesale buyers, m-Health apps that brought healthcare to millions of rural dwellers, and m-Learning apps that increased literacy across the nation.
Image source: Techcrunch
It’s not just India, either. Southeast Asia, as a whole, has benefited greatly from technological leapfrogging and their “mobile-first” status. Despite having a per-capita GDP of less than one-seventh of that of the United States and a large rural population, China is experiencing a rapid spread in mobile phone ownership, with an adoption rate almost equivalent to the United States’ (93 connections/100 citizens vs. 103 connections/100 citizens).
Thailand puts both China and the United States to shame with 1.4 phones per citizen and an adoption rate that almost doubled in 2013, when 3G was officially launched in Thailand.
Sparking a Startup Revolution in Latin America
Our final story takes place in Argentina and Brazil, two countries dedicated to building a thriving app economy in Latin America.
Image source: UP Brasil
There’s the economy, and then there’s the app economy. For the developed world, the $3 trillion mobile industry makes up a small percent of the total economy, clocking in at around 2% of GDP. For the developing world, the cash infusion introduced by the mobile industry can be enough to stimulate economic growth and development. In LatAm, the mobile industry is valued at as much as 5% of the combined economy and has left a culture of innovation in its wake.
With 278 mobile phones in use, Brazil has the fourth largest mobile market in the world (after China, India, and the United States). The country is fifth in the world for smartphone adoption, and smartphone penetration is still growing 22% every year. In 2014, the South American nation led the world in mobile commerce growth, with 61% of Brazilians making a transactions over a mobile device that year. Naturally, Brazil’s app stores reflect this growth, leading the world in annual app download growth in 2014.
Brazil’s neighbor to the south, Argentina, boasts similar stats. Though still young, Argentina’s mobile market saw a 221% increase in mobile internet users in 2013 and a 92% growth rate in mobile video ad revenue between 2013 and 2014. Of late, Argentina has seen an influx of mobile app startups and has become a major destination for offshore development. And of course, Argentina is home to Trivia Crack (Preguntados), the most downloaded game in the world with over 125 million downloads worldwide.
So what’s behind this massive growth?
According to Maximo Cavazzani, founder and CEO of Etermax, the Buenos Aires-based developer of Trivia Crack, LatAm’s burgeoning mobile market owes much of its success to how it has been overlooked by the rest of the world:
“The main advantage of launching in Latin America is that there are no competitors offering games with local content. Companies like Zynga, Gameloft, EA, King or global product launch only without considering the local content. Latin America may be the gateway to the world, achieving success in a market that has 600 million inhabitants; however, many of these companies do not pay attention.”
As Cavazzani alludes, the Latin American market was largely ignored by the first world. By and large, those app publishers that lead the charts in developed markets have done little to tap into emerging markets like LatAm. As a result, few publishers localize their apps, employing, instead, a one-size-fits-all approach.
Latin American entrepreneurs, primarily in Argentina, Brazil, and Mexico, were quick to seize this opportunity. They realized the vacuum of quality apps and jumped in to develop a whole new array of apps, specifically catering to local population.
Of course, localization, especially in LatAm, means more than just translating your app. It means investing the time and resources into truly understanding the target audience. Publishers who wish to succeed in this diverse region must take into account the differences in culture, language, currency, and state legislature that make each country different.
Those that do invest the time to understand the local population, however, are rewarded in spades. Beyond winning the Latin American download, publishers who set their eyes on LatAm benefit from one of the most profitable segments in the world. This is particularly true in the gaming genre, for which Brazil has one of the highest payer/player ratios in the world, with 61% of gamers spending money on or in mobile games. And, thanks to the lowest average cost per install, Brazilian developers are free to retain much of this revenue.
Moreover, LatAm experienced an economic boom from an influx of demand for its developer talent. Of late, companies across North America and western Europe have set their eyes on LatAm as a source of affordable, high-level tech talent, leaving behind a wake of jobs, startups, and SMEs.
In an interview with Founders’ Grid, Franco Breciano, the founder of a venture-backed mobile games startup in Argentina, the interest in offshoring developer talent to LatAm can be attributed to three factors: (1) their innate scrappy attitude and the ability to do much with little, (2) the US-friendly timezones, and (3) salaries one-third of their US equivalents for the same quality of professionals in the fields of software and art.
With the most westernized culture of LatAm and a strong English-speaking population, Argentina has risen as the top offshore destination, although Brazil, Mexico, and Colombia are fast on its heels.
Toward a Global, Mobile World
In 2005, famed American economist Thomas Friedman proclaimed, “the world is flat.” The metaphor has never held truer than in the face of the mobile revolution, where mobile technology is leveling the playing field worldwide and giving all equal opportunity to participate in global commerce.
The stories of Kenya, India, Argentina, and Brazil are but a few of the stories of how mobile apps and telephony are changing the global competitive landscape. These four countries realized tremendous economic growth in recent years, thanks largely to how mobile has placed these, once isolated, nations on the map of global commerce.
In sub-Saharan Africa, we saw how mobile money has brought in an infusion of cash so great it required monetary policy intervention. In southeast Asia, we saw how the wireless nature of mobile connected even the most remote regions of India and China to leapfrog impoverished communities into the twenty-first century. And in Latin America, we saw how the entrepreneurial bug can spread over an entire continent, ushering in a wave of mobile tech startups that just might become tech’s next billion-dollar unicorns.
In the years to come, we expect the mobile revolution to reach full fruition, with affordable, connected devices available to all. Mobile will prove the “Great Equalizer.” We’ll see third-world developers empowered to compete with the first world’s tech giants, and we’ll see a closing of the digital gap as developing nations leapfrog prohibitively expensive telecommunications infrastructure in favor of going mobile-only.
At the same time, the stories above speak to some of the cautions of the mobile revolution. The support of Latin American governments and proactive policies show what can be accomplished with the alignment of the government and technology sectors. Conversely, Kenya’s 20% inflation rate illustrates the dangers of retroactive policy and the consequences of letting growth go unchecked.
Finally, they speak to the limits of globalization. As Latin America saw, a one-size-fits-all approach won’t cut it, regardless of how flat the modern world is. Those who emerge on top in the mobile, global market will be those who truly understand their customers—and understand that each of their customers is unique and demand more than language localization to win their business.
What changes have you observed in the global landscape? Are we right to call the mobile revolution the Great Equalizer? Or is it falling short of this lofty goal, or even reinforcing existing economic inequalities that we missed in our research? Please share your take in the comments below, and stay tuned to see which of our 2016 predictions for mobile hold true in the year to come.